Perceived Effect of Shareholders on Corporate Governance

Abstract

The study aimed to investigate the effect of shareholder engagement on corporate governance in Pakistan. In the current research study shareholders participate as role of executive director, management, protection of rights, annual general meeting and meeting of board of director. The study utilized primary data that were collected from 200 randomly selected investors through a structured questionnaire. All the investors were collected through proportional allocation method from Tourus Securities & First National Equity companies. The collected data were subjected to Cronbach’s Alpha for its reliability, and regression and correlation analyses were adopted to investigate the effect of executive directors, management, AGM (Annual General Meeting), meeting of BOD (Board of Director) on corporate governance. Similarly, model diagnostic tests like multicollinearity and heteroskedasticity were also applied for checking the model assumptions. The results of the study indicate that executive director, protection of right and management have significant and positive relationship with corporate governance and annual general meeting has significant but negative relationship with corporate governance while meeting of board of director has non-significant positive relationship with corporate governance. Therefore, it is concluded that shareholders engagement as executive director, management, protection of rights and meeting of board of director have direct effect on corporate governance while shareholders engagement as annual general meeting has no significant effect on the corporate governance. It is suggested that the findings of the study might play a vital role for the investors, shareholders and all those interested to invest or purchase any stock for the first time.